IRR Calculator
Find the internal rate of return on an uneven cash flow stream — then see how badly it flatters the investment once you drop its reinvestment assumption.
IRR Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Results are a model, not a quotation — an institution's own figures govern.
- Every input is an assumption; change one and the answer changes with it.
- Rounding is applied only at the display layer, so totals may differ by a cent from a statement that rounds each line.
In short: An outlay of $50,000 returning $12,000, $15,000, $18,000, $20,000 and $22,000 has an IRR of 19.442% and an NPV of $14,149.99 at a 10% hurdle. But IRR assumes every distribution is reinvested at 19.442%; at a realistic 8% the modified IRR is 14.828% — the headline overstates the return by 461 basis points.
Formula
IRR is the rate that sets NPV to zero. MIRR replaces its hidden reinvestment assumption with a rate you specify, which is why the two diverge so widely on high-return projects.
Worked Example
- Lay out the stream. −$50,000 today, then $12,000, $15,000, $18,000, $20,000 and $22,000.
- Solve for the zero. Find the discount rate at which those flows are worth exactly $50,000 today: 19.442%.
- Check against the hurdle. At 10% the NPV is $14,149.99, so the project creates value.
- Drop the reinvestment fiction. Compound the inflows at a realistic 8% instead: they reach $99,816.75.
- Recompute honestly. That gives an MIRR of 14.828% — 461 basis points below the headline.
Analyst's note. IRR's defect is not the arithmetic, it is the embedded assumption: the metric implicitly reinvests every distribution at the IRR itself. If a project returns 19.442%, IRR assumes you have somewhere to redeploy each payment at 19.442% — and if you did, you would not be evaluating this project. MIRR at 8% is the honest number. Private equity and property syndications quote IRR precisely because it is the most flattering measure available, and it flatters most when returns are highest and cash comes back earliest.
Strengths & Limits Of This Model
Where this engine is strong
- Runs entirely in your browser — no figure you type is transmitted or stored.
- Shows the full working, so every number can be traced and challenged.
- Free, unmetered and free of affiliate incentives.
Where it stops
- Generalised assumptions cannot capture every individual circumstance.
- Jurisdiction-specific rules and mid-year changes may not be reflected.
- A model output is not a substitute for a professional review of your position.
Practical Use Cases
Comparing projects of different shapes
IRR is scale-blind: a 40% return on $1,000 beats a 20% return on $1m by this measure. Always read it alongside the NPV, which is denominated in money. The NPV Calculator handles the value question directly.
Evaluating a quoted fund or syndication return
When a sponsor quotes IRR, ask what MIRR the same flows produce at a realistic reinvestment rate. On these figures the gap is 461 basis points, and on front-loaded distributions it is wider still.
Checking how long your capital is exposed
Payback of 3.25 years becomes 3.96 years once discounted at the hurdle. That difference is the compensation you require for waiting, and it is invisible in the nominal figure. Cross-check the compound equivalent with the CAGR Calculator.
Methodology & Editorial Standards
IRR is solved by 400-step bisection between -99.99% and 1000%, which is slower than Newton-Raphson but cannot diverge or land on the wrong root near a boundary. The engine requires a genuine sign change and reports the absence of a solution rather than a spurious figure. Note that conventional streams with one sign change have exactly one IRR; streams that alternate sign can have several, and this engine returns the lowest positive root — another reason to prefer NPV or MIRR when flows are irregular. MIRR compounds positive flows forward at your stated reinvestment rate and discounts negatives back at the hurdle. Payback is interpolated linearly within the crossing year. Annual periods and end-of-year timing are assumed throughout. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
IRR Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
What is the internal rate of return?
The discount rate at which a project's net present value is exactly zero — the break-even cost of capital. On these flows it is 19.442%, meaning the project creates value for any financing cost below that.
Why does IRR overstate returns?
Because it implicitly assumes every distribution is reinvested at the IRR itself. If a project yields 19.442%, the metric assumes you can redeploy each payment at 19.442%. At a realistic 8% the honest figure is 14.828% — 461 basis points lower.
What is MIRR and should I use it?
Modified IRR compounds inflows forward at a reinvestment rate you specify and discounts outflows at your hurdle. It removes IRR's central fiction and is almost always the better comparator, particularly for front-loaded cash flows.
Should I use IRR or NPV?
NPV, when they disagree. IRR is a percentage and therefore blind to scale — it prefers a 40% return on $1,000 to a 20% return on $1m. NPV is denominated in money and answers the question that actually matters.
Can a project have more than one IRR?
Yes. Any stream whose sign changes more than once can have multiple roots, and all of them are mathematically valid. This is a strong signal to abandon IRR for that project and rely on NPV or MIRR instead.
What if there is no IRR at all?
If the cash flows never cross zero — all positive or all negative — no rate sets the NPV to zero. The engine says so explicitly rather than returning a meaningless number.
What hurdle rate should I use?
Your weighted average cost of capital, or the return available on the next best alternative of similar risk. Using a rate below your true cost of capital will approve projects that destroy value.
What is the profitability index?
The present value of inflows divided by the outlay — 1.283 here. Anything above 1.0 creates value, and it is a useful tie-breaker when capital is rationed and you must rank projects by value per dollar invested.
What is the difference between payback and discounted payback?
Payback ignores the time value of money and answers 3.25 years here; discounted payback applies the hurdle rate first and answers 3.96 years. The gap is the compensation you require for waiting.
Why do private equity funds quote IRR?
Because it is the most flattering available measure, especially with early distributions and capital call timing that the sponsor partly controls. Always ask for the multiple on invested capital alongside it — 1.740× here.
Does IRR account for risk?
No. It is a return measure, not a risk-adjusted one. Two projects with identical IRRs can have entirely different risk profiles, which is why the hurdle rate — where risk belongs — must be set separately and honestly.
How does timing affect IRR?
Enormously. Cash received earlier raises IRR disproportionately, because the metric compounds it for longer at the IRR itself. Two projects returning identical totals can have very different IRRs purely from timing.
Can I use IRR for personal investments?
Yes, and it is the correct tool whenever contributions and withdrawals are irregular — a rental property, a business stake, or a portfolio with uneven deposits. A simple percentage return cannot handle uneven timing.
What reinvestment rate should I assume for MIRR?
What you could genuinely earn on the money when it arrives — typically your portfolio's expected return, or a safe rate if the cash will sit idle. Assuming the IRR itself simply recreates the problem MIRR exists to solve.
Why does this engine use bisection?
Because it cannot diverge. Newton-Raphson converges faster but can overshoot into invalid territory near steep gradients or multiple roots. Four hundred bisections resolve the rate far beyond display precision, and the reliability is worth the cost.
Is this irr calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.
Can I use it offline?
Largely, yes. Because computation is client-side, the page continues to calculate without a network connection once it has loaded.